This is an excellent, MUST READ article from leading macro-economist, Gavyn Davies, writing in his FT blog. Check it out!
As usual, Gavyn Davies used his experience and judgement to cut through complexity and highlight emerging trends.
I particularly liked the focus on four fundamental economic trends, namely:
- Decline in unionisation in the major developed economies
- Rise of “financialisation”, which has increased the incentives on management to maximize the return on capital for themselves and shareholders
- Technology revolution, and
These four pivotal trends devalue the importance of labor, so that jobs have become increasingly commoditized.
This leads me to some important open questions:
Given the four economic trends in major business namely, declining unionization, rising financialization, technology revolution and globalization, how should Western Governments respond to:
- Take a strategic approach to economic growth, building upon strengths and cutting out public sector waste?
- Ensure effective taxation of profits?
- Increase the skill-base of the nation?
- Deploy the adult population effectively?
- Deploy Scandanavian style social policies?